Art Cashin explains why he doesn't see a major link between crypto volatility and stock market

Published Tue, May 25 202112:27 PM EDTUpdated Tue, May 25 20215:26 PM EDT

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

Wall Street veteran Art Cashin told CNBC on Tuesday he believes there's no substantial link between volatility in cryptocurrencies like bitcoin and stock-market trading. "I think it hasn't had a major effect ... because the interconnectivity is not quite there," Cashin said in an interview on "Squawk on the Street." However, people on Wall Street are "nervously" watching the wild price swings in bitcoin and other cryptos, said Cashin, director of NYSE floor operations for UBS. Cashin said he expects the volatility to continue in large part due to the risky trading strategies of some crypto participants. "I remain nervous about the crypto markets," he said. "Thankfully, unlike Long-Term Capital and these other things, I don't think it spills over into equities — at least not heavily," he added. The hedge fund Long-Term Capital Management had threatened the global financial system when it imploded in 1998. Others see it differently than Cashin, including CNBC's Jim Cramer, who has sounded the alarm recently about the influence he believes crypto activity appears to be having on U.S. stocks. "I don't want to see all these interrelated," Cramer said Thursday, one day after bitcoin fell more than 30% in a single session, before recovering some losses. "That's frightening. I mean, there's real companies in the Nasdaq," said the "Mad Money" host, who added Friday that he expects the linkage "to end soon." To be sure, Cashin acknowledged on Tuesday a steep pullback in bitcoin like the one last week could prompt investors to adjust their portfolios across asset classes, including stocks. "What happens is, people have rather broad holdings. If you're going to get a margin call in one sector of it that's particularly volatile, you might have to sell something else," Cashin said. If an investor uses leverage to amplify a bet on a particular security, a margin call can happen when that security goes down in price and a brokerage firm requires the investor to deposit additional capital in their account to meet a set requirement. In some cases, there could be a predetermined price at which forced selling occurs. In other cases, an investor may sell a different security to comply. "There's an old expression in Wall Street: When you can't sell what you want to sell, you sell whatever you can sell, sometimes even your grandmother's jewelry," Cashin quipped. Some analysts said bitcoin traders using leverage — potentially with ratios up to 100 to 1 — are one factor for the recent wave of crypto volatility. Bitcoin, the world's largest cryptocurrency by market value, traded around $38,000 on Tuesday. While higher than last week's lows of near $30,000, bitcoin remained well below last month's all-time highs of almost $65,000. Some observers such as Guggenheim Partners' Scott Minerd expect bitcoin to see further selling . Watch the full interview with UBS' Art Cashin above.

Art Cashin

David A. Grogan | CNBC

Wall Street veteran Art Cashin told CNBC on Tuesday he believes there's no substantial link between volatility in cryptocurrencies like bitcoin and stock-market trading.

"I think it hasn't had a major effect ... because the interconnectivity is not quite there," Cashin said in an interview on "Squawk on the Street."

However, people on Wall Street are "nervously" watching the wild price swings in bitcoin and other cryptos, said Cashin, director of NYSE floor operations for UBS.